25 F.2d 773 | E.D. Pa. | 1928
This is a motion to dismiss a creditors’ petition, for the reason that it fails to set forth an act of bankruptcy within the meaning of the statute. The act of bankruptcy intended to be charged by the petition is the fourth act, created by the amendment of 1926 (11 USCA § 21(a) (4), which is as follows: “(4) Suffered, or permitted, while insolvent, any creditor to obtain through legal proceedings any levy, attachment, judgment, or other lien, and not having vacated or discharged the same within thirty days from the date such levy, attachment, judgment, or other lien was obtained.”
The petition avers in substance that the alleged bankrupt, while insolvent and within four months next preceding the filing of the petition, permitted a judgment to be entered against him, which judgment has not been vacated, discharged, or satisfied, and that more than 30 days have elapsed since the entry of the judgment. It is contended that this is not sufficient, because there is no allegation that the judgment is a lien on any property of the bankrupt. The point for decision is whether the word “judgment” in the statute means only a judgment which is a lien upon the property of the alleged bankrupt, or means any judgment, whether a lien or not.
The statute specifies “any levy, attachment, judgment, or other lien.” 11 USCA § 21(a) (4). Many judgments (as in a ease where the defendant owns no real estate, but personal property only) are not liens. There is thus an ambiguity, and it is proper to consider the history and purpose of the legislation in order to determine its true intent. In Citizens’ Banking Co. v. Ravenna National Bank, 234 U. S. 360, 34 S. Ct. 806, 58 L. Ed. 1352, the Supreme Court held that the clause providing for the third act of bankruptcy (11 USCA § 21(a) (3) failed to cover a situation where the bankrupt had permitted a lien to be obtained against Ms property by legal proceedings, and had then done nothing for a period of more than four months, as a result of wMeh the lien of the judgment had ripened into a legal and enforceable preference.
The amendment of 1926 was designed, for the specific and limited purpose of remedying this defect in the existing law. The report of the Senate Judiciary Committee upon the bill says: “The amendment is for the purpose of preventing a creditor from obtaining a lien and holding it without proceeding to a sale under it until it ripened into a preference.” Clearly, the attention of the Congress was turned only to judgments wMeh were liens. Legislation directed toward judgments which were not liens would have been superfluous. Under the law as it stood before the amendment, no advantage could have been obtained prior to levy by the creditor holding such a judgment, and after levy and upon proceeding to a sale the provision for the third act of bankruptcy struck down the preference.
The context in which the word appears, and the limitations implied in the phrase “or other liens,” call for the application of the rule of noseitur a sociis. Neal v. Clark, 95 U. S. 704, 24 L. Ed. 586. The plain intent of the Congress, as well as the association of the word in the act itself, “justifies, if it does not imperatively require,” the conclusion that the judgment meant is a judgment which creates a lien.
If the judgment referred to in the petition is a lien, and so within the meaning of the statute thus construed, the petitioners should be permitted to so aver. Ten days will be allowed for amendment, and in default of such amendment the petition will be dismissed.